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South Africa goes into recession South Africa goes into recession
(30 minutes later)
The South African economy has gone into recession after official figures showed that it contracted an annualised 6.4% in the first three months of 2009. The South African economy has gone into recession for the first time since 1992, following a sharp slowdown in the manufacturing and mining sectors.
Africa's biggest economy shrank 1.8% in the previous three months, compared with the same period a year before. Africa's biggest economy contracted at an annualised rate of 6.4% between January and March, compared with the same period a year earlier.
The first-quarter figure was the biggest decline since 1984 and puts South Africa in its first recession since 1992. It was the biggest decline since 1984 and followed an annualised 1.8% fall in the previous three months.
The construction sector, however, was boosted by the upcoming World Cup.
South Africa is benefiting from a huge programme of government investment ahead of the football tournament in 2010.
Rate cut expected
A recession is generally defined as being two quarters of negative growth.A recession is generally defined as being two quarters of negative growth.
"It's far worse than we expected," said Elna Moolman, economist at Barnard Jacobs Mellet."It's far worse than we expected," said Elna Moolman, economist at Barnard Jacobs Mellet.
"It confirms the recession in the economy and certainly increases concerns about overall growth for 2009, given such a bad start for the year.""It confirms the recession in the economy and certainly increases concerns about overall growth for 2009, given such a bad start for the year."
World Cup spending
The Reserve Bank of South Africa is due to announce its latest decision on interest rates on Thursday.The Reserve Bank of South Africa is due to announce its latest decision on interest rates on Thursday.
It is now expected to cut rates by a full percentage point from the current level of 8.5%.It is now expected to cut rates by a full percentage point from the current level of 8.5%.
Statistics South Africa, which calculated the figures, said the slowdown in manufacturing and the mining and quarrying sector had been primarily responsible for the contraction.Statistics South Africa, which calculated the figures, said the slowdown in manufacturing and the mining and quarrying sector had been primarily responsible for the contraction.
Mining firms have been hit by falling demand for their products as a result of the global economic slowdown.Mining firms have been hit by falling demand for their products as a result of the global economic slowdown.
One of the few sectors showing growth was construction, which has been boosted by a huge programme of government investment ahead of the football World Cup in 2010.